EV demand in Europe is slowing as customers await affordable electric cars. Europe’s sales of electric cars seem to be slowing down after years of rapid growth as consumers wait for better, more affordable versions that will be out in two to three years.
In the first nine months of 2023, sales of fully electric vehicles increased by 47% in Europe, but rather than rejoicing, automakers like Tesla (TSLA.O), Volkswagen (VOWG_p.DE), and Mercedes-Benz (MBGn.DE) issued some statements.
They advised caution because Volkswagen’s EV order intake is only half of what it was the year before due to high borrowing rates and a slowing market.
Studies by four international data analysis companies and dealers in Germany and Italy say that EVs are not being adopted faster because customers are not sure if the cars can meet their needs for safety, range, and affordability, not because the economy is unstable.
According to Thomas Niedermayer, 45, head of a family-run Bavarian auto company, “uncertainty is the main problem.” “Many assume that the technology will improve and would rather wait three years for the next model than buy a vehicle now that will quickly lose value.”
Consider Flavia Garcia and Tom Carvell at Scotland’s Edinburgh. Their beat-up Toyota Auris, which they dubbed Martina, is 15 years old and has to be replaced. A lack of infrastructure for charging, concerns about battery life, and cost are deterring the pair from considering an electric vehicle (EV) as the prohibition on gasoline and diesel cars draws closer.
As per AutoTrader, the average cost of new electric vehicles in Britain remains 33% higher than that of fossil fuel versions.
Furthermore, most upcoming models aimed at entry-level customers won’t be available until at least 2025. At that point, they must compete with an extended Chinese lineup from BYD (002594. SZ) to Nio (9866. HK) in Europe.
Garcia, a 29-year-old corporate communications director, said, “You want to do the right thing for the environment, but it feels like you’re setting yourself up for a costly investment that will make your life that bit more complicated.” “We’ll probably get a hybrid first.”
The fast sales surge spurred by early adopters and corporate fleets will soon end, as critics have long predicted, citing a shortage of reasonably priced EVs. A worse showing in September, studies of consumer confidence, and pessimistic remarks from automakers and dealers suggest that the low growth period may have arrived.
Even if they lag behind in switching to EVs, American automakers are still having trouble. Due to lower demand and more significant expenses after new United Auto Worker contracts, Ford and GM recently warned that they were postponing the release of less expensive electric vehicle models and cutting back on investment.
However, the issue is cyclical. Regarding the September decline in sales in Europe, Felipe Munoz of JATO Dynamics stated that demand will be low as long as no less expensive EVs are available.
“They can afford to focus on profitability right now; they don’t have to push products out from a regulatory standpoint,” stated Alistair Bedwell, GlobalData’s (DATA.L) head of powertrain forecasts.
“But they need to have an eye on Tesla and the Chinese brands because they don’t want to get too far behind.” According to a survey conducted over the past year in Germany by market research firm The Langston Co., the intention to purchase an electric vehicle has remained stable. This indicates that while the number of EVs being sold is increasing, the number of individuals who wish to buy an EV is not.
Growing sales do not necessarily indicate increased demand but rather that automakers, who were having trouble producing electric vehicles due to supply chain constraints, can now fulfill backlogs of orders, according to Ben DuCharme, insights manager at The Langston Co.
According to Philip Nothard, insight director at dealer services company Cox Automotive, low residual values also turn off purchasers. This is because many individuals and businesses pick new automobiles based on what they can sell for a few years.
“We call it the valley of death, which we will be going through in 2024 to 2027: low residual values, high supply, and low demand,” Nothard stated.